Setting the Body Corporate Budget: What Happens at the AGM

Why the Budget Matters

The body corporate budget is not just a financial document — it directly determines how much you pay in levies for the coming year. A well-prepared budget funds necessary maintenance and builds appropriate reserves. An inadequate budget defers costs that will inevitably be paid later, often at much greater expense.

Understanding the budget process helps you ask better questions and make better decisions at the AGM.

How the Budget Is Prepared

In the months before the AGM, the committee (usually with the assistance of the body corporate manager) prepares draft budgets for both the administrative fund and the sinking fund.

Administrative fund budget: Estimates the expected income and expenditure for the coming year. Key line items typically include:

Building insurance premium
Body corporate management fees
Routine maintenance contracts (gardens, pool, cleaning)
Utilities for common areas
Expected ad hoc repairs
Administration costs (printing, postage, banking)

Sinking fund budget: Based on the current 10-year sinking fund forecast. Sets the annual contribution required to build sufficient reserves for forecast major expenditure.

What Happens at the AGM

The draft budgets are included in the AGM notice sent to owners at least 21 days before the meeting.

At the AGM:

The committee or manager presents the proposed budgets
Owners can ask questions and discuss the line items
Owners vote to approve or reject each budget
If approved, the committee determines the levy amounts required to fund the budgets
Levy notices are issued to all owners

If a budget is rejected, the committee must revise and resubmit — which may delay levy notices and create cash flow difficulties for the scheme.

What to Review Before the AGM

Compare to last year's actuals: Did the scheme spend more or less than budgeted? If significantly over budget, why? If under, what was deferred?

Insurance renewal: Is the insurance line based on a current renewal figure, or estimated? Has the insured value been updated?

Maintenance trends: Are maintenance costs trending up? What does this tell you about the condition of the common property?

Sinking fund contribution: Is the proposed contribution consistent with the sinking fund forecast recommendation? If below, why?

One-off items: Are there any significant one-off expenditure items budgeted? Are they appropriate and well-supported?

Questioning the Budget

Any owner can raise questions about the budget at the AGM or submit a written query to the manager beforehand. You can also submit a motion to amend a specific line item before the budget is voted on.

If the committee proposes a budget that you believe is materially inadequate — for example, a sinking fund levy set significantly below the forecast recommendation — document your objection and vote against it, or submit a counter-motion with a revised figure.

This article is general information only and does not constitute legal advice. For advice about body corporate budgeting, consult a strata lawyer or the Office of the Commissioner for Body Corporate and Community Management.